August 2018 (NYSE: SAFE)s22.q4cdn.com/329095196/files/doc_presentations/2018/08/...Corporate...

(NYSE: SAFE)

Corporate PresentationAugust 2018

1Safety, Income & Growth Inc.The Ground Lease Company

Forward-Looking Statements and Other MattersThis release may contain forward-looking statements. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements can be identified by the use of words such as “illustrative”, “representative”, “expect”, “plan”, “will”, “estimate”, “project”, “intend”, “believe”, and other similar expressions that do not relate to historical matters. These forward-looking statements reflect the Company’s current views about future events, and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause Company’s actual results to differ significantly from those expressed in any forward-looking statement. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: market demand for ground lease capital; the Company’s ability to source new ground lease investments; risks that the rent adjustment clauses in the Company's leases will not adequately keep up with changes in market value and inflation; risks associated with certain tenant and industry concentrations in our initial portfolio; conflicts of interest and other risks associated with the Company's external management structure and its relationships with iStar and other significant investors; risks associated with using debt to fund the Company’s business activities (including changes in interest rates and/or credit spreads,and refinancing and interest rate risks); general risks affecting the real estate industry and local real estate markets (including, without limitation, the potential inability to enter into or renew ground leases at favorable rates, including with respect to contractual rate increases or participating rent); dependence on the creditworthiness of our tenants and their financial condition and operating performance; competition from other developers, owners and operators of real estate (including life insurance companies, pension funds, high net worth investors, sovereign wealth funds, mortgage REITs, private equity funds and separateaccounts); unknown liabilities acquired in connection with real estate; and risks associated with our failure to qualify for taxation as a REIT under the Internal Revenue Code of 1986, as amended. Please refer to the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 and any subsequent reports filed with the Securities and Exchange Commission (SEC) for further discussion of these and other investment considerations. The Company expressly disclaims any responsibility to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations ContactJason Fooks

(212) [email protected]


Corporate Snapshot

NYSE Ticker SAFE

Share Price (8/6/18) $17.36

Book Value / Share $20.00

Dividend Yield (8/6/18) 3.46%

Value Bank(1) $1,259M

Market Cap (8/6/18) $316M

Total Assets $683M

Total Liabilities $315M

Total Equity $368M

Note: As of 6/30/18 unless otherwise stated.(1) Please refer to the “Capital Appreciation: Value Bank” slide found later in this presentation for additional details.


Investment Opportunity (NYSE: SAFE)

Ground leases generate attractive risk-adjusted returns combining:• Safety: One of the safest parts of a real estate capital structure

• Income: Growing inflation-hedged rent streams

• Growth: Potential for significant capital appreciation

Note: Please refer to the Glossary for definitions of capitalized terms used in this presentation. Please refer to the “Appendix” for a reconciliation of non-GAAP financial metrics. Figures in this presentation are provided as of 6/30/18, unless otherwise specified.(1) Please refer to the “Capital Appreciation: Value Bank” slide found later in this presentation for additional details.

Market Disruptor

SAFE InvestmentAttributes

Active Pipeline

Seven deals aggregating $141M currently under LOI (as of July 17)SAFE continues to expand into more cities with new customers while continuing to see repeat client business

Safety, Income & Growth set out to redefine how the market looks at real estate financeFirst and only publicly-traded company to focus on ground lease investmentsLarge opportunity as first mover in a significant, untapped market

Portfolio Performance

Since its IPO in June 2017:• Closed $291M of additional transactions, increasing the size of its portfolio by 86% to $631M• Annualized Cash Rent rose from $17.4M to $29.4M, driven by a combination of new ground

lease originations and the rent escalations built into the ground lease contracts• Value Bank grew 188% to $1.3B(1)


Reinventing Ground Leases for Today’s Market While debt products over the years have become increasingly tranched to more efficiently

connect varying risk-reward levels, ground leases have not evolved in the same manner

Equity

BankMortgage

AAA

BBB

Equity

AAA

AAA

BBB

Equity

AAA

Mezzanine

AAA

BBBBB

B-Note

Equity

AAA

Mezzanine

1980 2018

Deb

t Pro

duct

sG

roun

d Le

ases Equity

Ground Lease

Leasehold Finance

1990 2000

Ground leases have remained stagnant, with no institutional platforms focused on innovation until…

2010

Pref Equity

The SAFE Ground Lease™

AAA

BBBBB

B-Note

Equity

AAA

Mezzanine


The SAFE Ground Lease™


What is a Ground Lease?A ground lease generally represents ownership of the land underlying a commercial real estate property which is triple net leased on a long-term basis by the Landlord (SAFE) to a Tenant that owns and operates the building.

Tenant - receives beneficial ownership of property during lease term. Responsible for all operating costs and improvements.

Landlord (SAFE) - collects ground rent payments during the lease term. At lease expiration, or upon a Tenant default, the land and building, including all improvements, revert back to SAFE.

1

2

Ground Lease Landlord (SAFE)

Tenant

1

2

The Structure:


The SAFE Ground Lease™ Business

The Land

The Building

Our business is founded on the idea that there is a fundamental risk-reward mismatch in the current commercial real estate market.

Owners and operators of buildings seeking higher returns with higher risk are currently also forced to purchase the land, a lower yielding asset that costs them additional capital.

The SAFE Ground Lease™ essentially bifurcates the land from the building to unlock value, freeing the building operator to focus on their higher return business, while SAFE can provide a portfolio of stable, increasing income to investors.

Similar to the risk tranching of the debt markets, the SAFE Ground Lease™ unlocks value so when you add up the sum of the parts, 1 + 1 = more than 2.

Higher risk-return profile

Lower risk-return profile


3 Key Investment Attributes of a SAFE Ground Lease™

Income Growth

1 2 3

Safety

Senior position in capital structure

Senior priority of rent payment

Contractual rent escalators increase income over time

Rent bumps are amplified with leverage

Inflation-hedging components

Reversion rights at lease expiration provide opportunity for significant capital appreciation

Combined Property Value expected to increase with inflation over time


Safety: Senior Position in the Capital Structure

Note: 35% of Combined Property Value represents typical ground lease terms.

Fee Simple Ownership

Asset Comparison

Tenant65% of CPV

SAFE Ground Lease™35% of CPV

(Last Dollar Exposure)

When compared to fee simple ownership of real estate, a SAFE Ground Lease™ occupies a more

secure position

100% of CPV(Last Dollar Exposure)

Highest Risk

Lowest Risk


Safety: Senior Cash Flow Priority Position

Note: $ in millions.

LowestPriority

Highest Priority

Illustrative P&L Statement for Commercial Real Estate Asset Under a Ground Lease

Ground rent paid to SAFE occupies a

senior cash flow priority position

Cas

h Fl

ow P

rior

ity

Property Level Revenue $100

Property Level Expenses:

Real Estate Taxes ($5)

Utilities (10)

Ground Rent to Landlord (SAFE) (15)

Other Operating Expenses (25)

Net Operating Income $45

Interest Expense ($30)

Net Income $15

Capital Expenditures ($5)

Net Cash Flow to Equity $10


Income: Growing Rent StreamsContractual rent increases create organic, long-term compounding cash flows

$100 $120$146

$178$216

$264

$322

$392

$478

$583

$696

4.0% 4.8%5.8% 7.1%

8.7%10.6%

12.9%15.7%

19.1%

23.3%

27.9%

$0

$100

$200

$300

$400

$500

$600

$700

0%

10%

20%

30%

40%

50%

1 10 20 30 40 50 60 70 80 90 99

Lease Term Year

Ground Rent GrowthAssuming 2.0% Annual Rent Escalations

Ground Rent

Rent Yield

Note: Reflects an illustrative example of how $100 of initial annual ground rent grows when increased by 2.0% annually over the life of a hypothetical 99-year ground lease.(1) Illustrative first year ROA reflects the midpoint of SAFE’s targeted investment range of 3.0% - 5.0%.


Income: Inflation Protection

Note: Charts reflect an illustrative example with the following assumptions: ROA of 4.0%, annual bumps of 2.0%, leverage of 2.0x debt to equity and fixed-rate liabilities of 3.5%.

5.0%5.0%5.2%

5.5%5.7%

6.0%6.2%

6.5%6.8%

7.1%7.3%

7.6%7.9%

8.2%8.5%

8.8%9.2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

Star

t 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Lease Term Year

Levered AAACMBS

Levered GroundRent

420 bps (+83%)

increase

4.0%4.0%4.1% 4.2% 4.2% 4.3% 4.4% 4.5% 4.6%4.7%4.8% 4.9% 5.0% 5.1% 5.2% 5.3%5.4%

3%

4%

5%

6%

7%

8%

9%

10%

11%

Star

t 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Lease Term Year

AAA CMBS

Ground Rent

Ground leases produce a cash-on-cash growing income stream versus similar risk fixed debt

Adding fixed rate leverage amplifies the bumps


Capital Appreciation: Value Bank of $69 per Share Value Bank is calculated as today’s estimated Combined

Property Value (CPV) less the Cost Basis of SAFE’s portfolio

SAFE uses Value Bank to track the capital appreciation potential at lease expiration from our rights to acquire the buildings on our land.(1)

(1) Our ability to recognize value through reversion rights may be limited by the rights of our tenants under some of our ground leases, including tenant rights to purchase the properties or level properties under certain circumstances. Please refer to our Current Report on Form 8-K filed with the SEC on July 26, 2018 and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, as updated from time to time in our subsequent periodic reports, filed with the SEC, for a further discussion of such tenants rights.

$1,259MValue Bank

(CPV – Cost Basis)

$631MCost Basis

$1.9B Total CPVCombined Property Value

Cost Basis

Value Bank

$1,890M

$631M

$1,259M

CBRE conducts independent appraisals of the CPV of each asset(2)

67%

33%

(2) SAFE relies in part on CBRE’s appraisals in calculating Value Bank. SAFE may utilize management’s estimate of CPV for ground lease investments recently acquired that CBRE has not yet appraised. Please refer to our 8-K filed July 26, 2018 with the SEC for additional detail on CBRE’s valuation and our calculation of Value Bank.


Capital Appreciation: Inflation Protection

Note: Assumes a $100M building is bifurcated into a $35M ground lease and $65M leasehold. Assumes real estate values (CPV) grow over long periods of time with inflation.

In conjunction with income streams, inflation has a magnifying effect on Value Bank which can create significant additional upside

$35M

$65M $85M$111M

$143M$181M

$229M

$100M CPV$120M CPV

$146M CPV

$178M CPV

$216M CPV

$264M CPV

Year 1 Year 10 Year 20 Year 30 Year 40 Year 50

Ground Lease Basis

Value Bank Potential

$35M

$65M$95M

$140M

$201M

$282M

$391M

$100M CPV

$130M CPV

$175M CPV

$236M CPV

$317M CPV

$426M CPV

Year 1 Year 10 Year 20 Year 30 Year 40 Year 50

With 2% Inflation With 3% Inflation


Typical SAFE Ground Lease™ Terms

Lease Term Base term up to 99 years plus renewal options

Contractual Rent Escalators Fixed bumps, CPI-based increases, or revenue participations

Property Expenses No Landlord obligations

Capital Expenditures No Landlord obligations

Tenant Repair and Maintenance Tenant obligated to maintain the underlying property

Remedies Upon Tenant Default

Landlord (SAFE) entitled to terminate the lease, regain possession of the land and take ownership of the building, including all improvements

Reversion Right at Lease Expiration Possession / ownership of the land and improvements revert to Landlord (SAFE)


Target SAFE Ground Lease™ Features

Investment Size $20M - $250M (with the ability to execute larger deals)

Locations High barriers-to-entry major metropolitan areas

Cap Rate First-year rent yields of 3.0% - 5.0%

Exposure to Property Initially 30% - 45% of CPV

Ground Rent Coverage 2.0x to 5.0x for the first year of the lease

Initial Lease Term 30 to 99 years

Rent Escalators Periodic fixed rent escalators with CPI-based adjustments


How a SAFE Ground Lease™ Maximizes Returns

$48.1M Agency Loan (74% LTV)T+200 Pricing

10yr Term (2 years I/O)

$16.9M Equity

SAFE Ground Lease™$35.0M

4.0% Initial Yield

Property

$75.0M Agency Loan (75% LTV)T+200 Pricing

10yr Term (2 years I/O)

$25.0M Equity $5.25M NOI5.25% Cap Rate$100.0M Value

Before With a SAFE Ground Lease ™

Same Purchase PriceLess Equity Needed

Better DSCR on Leasehold LoanBetter Cash-on-Cash Returns

$100.0M$16.9M1.67x9.1%

$100.0M$25.0M1.46x6.6%

Fee

Sim

ple

Cap

Sta

ck $

100.

0MLeasehold C

ap Stack $65.0M

The Power of a SAFE Ground Lease™


ThePortfolio


Recent Investments

A SAFE Ground Lease™ on two five-story office buildings in the Central Perimeter submarket of

Atlanta. This marks the third successful ground lease with this

client. The buildings are well-located at the intersection of GA-400 and I-285, near three MARTA

transit stations and multiple corporate headquarters. iStar

provided the leasehold financing to the client.

A SAFE Ground Lease™ on a Class A multifamily in the high-end Baldwin Park submarket of Orlando. The property is a 212-unit community with amenities

and close access to shopping centers, office parks, and the Orlando Executive Airport.

Two SAFE Ground Leases™ on adjoining industrial properties in

Miami. The buildings are fully occupied by LSG Sky Chefs and adjacent to the Miami Airport

Intermodal. SAFE purchased the ground leases and its client

purchased the leaseholds on the properties from iStar.

Glenridge PointAtlanta, GA

Promenade CrossingOrlando, FL

Miami Airport 1 & 2Miami, FL


Geographic Diversification by MSASeattle

11.5%

8.9%

14.5%Detroit

Salt Lake City

5.1%

San Diego

3.4%

San Francisco

3.3%

Durango

2.2%

Dallas

11.8%

Atlanta

7.8%Washington, D.C.

1.2%

Milwaukee

22.5%

Los Angeles

0.3%

Minneapolis

Raleigh-Durham3.2%

2.2% Miami

Orlando2.1%


Hotel37%

Multifamily32%

Office28%

Industrial3%

Percentage Rent36%

CPI23%

Fixed7%

Fixed w/ CPI-Based Adjustments

34%

3.0-4.0x39%

4.0-5.0x8%

5.0x+53%

>60 yrs61%

<20 yrs39%

20-60 yrs0.1%

<30%36%

30-40%22%

40-55%23%

55-60%19%

Ground Rent Coverage

Portfolio Stratification

(1) Weighted based on in-place base rent; assumes leases are fully extended based on in-place rent.

Property Type

Cost Basis as % of CPV

Lease Term Remaining(1)

Rent Escalator Type


Portfolio Metrics

Annualized base rent $26.1M

TTM Park Hotels percentage rent $3.3M

Total Annualized Cash Rent $29.4M

Total GAAP rent (including TTM % rent) $46.4M

Total Annualized Cash Rent as % of Cost Basis 4.7%

W.A. annualized contractual fixed rent escalations 1.8%(1)

Portfolio Rent Statistics

Cost Basis as % of CPV 33.4%

Ground Rent Coverage 4.7x

W.A. lease term remaining 59 years

W.A. lease term remaining including extensions 74 years

Total Cost Basis of Portfolio $631M

Portfolio Ground Lease Statistics

(1) Represents the weighted-average annualized escalation of leases that have contractual fixed bumps. Does not include leases with solely inflation-based or percentage rent escalations, which represent 23% and 36%, respectively, of the total portfolio cost basis.


Sarasota11%

Washington, D.C.57%

Indianapolis14%

San Diego10%

Phoenix8%

Active Pipeline (as of July 17)

Location (MSA)

Note: There can be no assurance that SAFE will acquire or originate any of the investments currently being pursued on favorable terms or at all. Percentages are based on estimated ground lease value.

PropertyType

The pipeline includes a strong mix of new customers and repeat client business

SAFE is targeting new MSA markets to expand and diversify its ground lease business

$141M Near-Term Pipeline (Under LOI)

7 Deals

Multifamily49%

Office31%

Hotel20%


CompanyDetails


2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

DrawnRevolver

$10

Corporate Debt Overview

Note: $ in millions. For additional information on our debt please refer to the 10-Q.(1) Initial maturity is June 2020 with two 1-year extensions. (2) Callable without pre-payment penalty beginning January 2021.(3) April 2027 represents Anticipated Repayment Date. Final maturity is April 2028.

$300(1)

$227(3)

Debt Maturity Profile

UndrawnRevolver

$290

W.A. Extended Maturity is 7.6 years

Debt Profile (Effective Rate)

2022

Jun.(1) $10 L+135

2023

Jan.(2) $71 3.04%

2027

Apr.(3) $227 3.77%

Total $308

$71(2)

Target Leverage

(i) <2.0x Debt to Equity(ii) 25% Debt as a % of CPV

Current LeverageBook DebtBook EquityLeverage (Debt to Equity)Combined Property Value (CPV)Debt as a % of CPV

$308$3670.8x$1,89016.3%


Interest Rate Protection

The Company seeks to mitigate the impact of interest rate fluctuations by entering into hedges associated with each ground lease prior to taking on long-term debt

In addition to $227M of long-term fixed-rate debt, the Company has entered into $213M of aggregate notional value of long-term rate lock hedges for prospective long-term financings on unlevered ground leases

Hedges sufficient to allow Company to leverage up to debt/equity target of 2x with interest rate protection

Weighted average of more than 10 years of interest rate protection on existing portfolio

$631MCost Basis

of Portfolio

$227MLong-Term

Fixed-Rate Debt

$213M Long-Term

Rate Lock Hedges

$440M


Dividend Coverage $0.15 dividend was declared in the second quarter representing an annualized rate of $0.60 per share.

Note: $ amounts are given per share. Please refer to the “EPS, FFO & AFFO Reconciliation” slide in the Appendix for additional details.

$0.18

$0.68 $0.64 $0.60

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

TTM EPS TTM FFO TTM AFFO Annualized Dividend


Overview of Manager: iStar (NYSE: STAR)

(1) $ in millions. Figures based on cost basis of the company’s total investment portfolio, including accumulated depreciation, real estate-related intangibles, amortization of intangibles, proportionate share of joint venture deprecation and amortization, and general loan loss reserves.

iStar (NYSE: STAR) brings experience built on nearly $40B of real estate finance and investment deals over the past two decades

National platform with 8 regional offices and nearly 200 employees

Largest shareholder of SAFE (39.8% of shares outstanding)

Current iStar Investment Portfolio(1) Fully Integrated Platform

White Space

Underwriting

Structure / Legal / Tax

Credit

Construction

Design

Servicing

Capital Markets

Risk Management

Leasing

Asset Management

Relationships / JV

Development

Net LeaseFinance

MarketingDigital

Net Lease$1,963 37%

SAFE$152 3%

RE Finance$1,067 20%

Land$726 14%

Operating Property$559 11%

Strategic Investments$7

<1%

Cash$767 15%

PortfolioBreakdown


Stockholder-Friendly Management Contract

Manager Wholly owned subsidiary of iStar Inc.

Management Fee 1.0% of total shareholder’s equity(1) (up to $2.5B)0.75% of total shareholder’s equity(1) (> $2.5B)

Management Fee ConsiderationPayment will be in SAFE stock (at the greater of the volume weighted average market price of our stock during the quarter for which the fee is being paid or the IPO price)

Lock-up Restriction from selling common stock received for management fees for 2 years from the date of such issuance(2)

Management Fee Waiver No management fee paid to manager during first year

Incentive Fee None (alignment as largest shareholder)

Term 1 Year

Renewal Provision Annual renewal to be approved by majority of SAFE independent directors

Termination Fee None

(1) Based on the total stockholder’s equity.(2) Such restriction will terminate at the effective date of the termination of the management agreement.

Best-in-class management contract and fee arrangement to support growth


Stockholder-Friendly Corporate Governance

(1) iStar will not acquire, originate, invest in, or provide financing for a third party’s acquisition of, a GL unless it has first offered that opportunity to SAFE. The exclusivity agreement will not apply to opportunities that include only an incidental interest in GLs or opportunities to manufacture or otherwise create a GL from a property that has been owned by iStar’s existing net lease venture with GIC for at least three years after the closing of the offering.

(2) Board may not adopt a stockholder rights plan without majority stockholder approval, except if the Board determines that seeking stockholder approval will not be in the best interests under the then existing circumstances. If a stockholder rights plan is adopted by the board without prior stockholder approval, such plan will expire on the next annual stockholders meeting held after the first anniversary of the adoption of such plan

Board of Directors Corporate Governance

Majority Independent Board Opted out of the MGCL Business Combination Act

Non-staggered Board Opted out of the MGCL Control Share Act

Lead Independent Director Opted out of MUTA

Exclusivity agreement with iStar will provide SAFE with a first look at GL investments(1) No stockholder rights plan(2)

Strong corporate governance model facilitates corporate accountability and stockholder alignment


Appendix


Appendix

Income StatementFor the Three Months Ended

June 30, 2018For the Six Months Ended

June 30, 2018Revenues:Ground lease and other lease income $9,861 $21,141Other income 1,713 2,126Total revenues $11,574 $23,267

Costs and expenses:Interest expense $3,376 $6,631Real estate expense 398 752Depreciation and amortization 2,275 4,546General and administrative(1) 2,527 4,559Stock-based compensation(1) 765 765 Other expense 471 510Total costs and expenses $9,812 $17,763

Net income $1,762 $5,504

Net (income) attributable to non-controlling interests (59) (82)

Net income attributable to Safety, Income & Growth Inc. and allocable to common shareholders $1,703 $5,422

Weighted avg. share count 18,191 18,191

Earnings per share $0.09 $0.30

Note: $ in thousands except for per share amounts.(1) Management fee and iStar reimbursables were waived by our manager through June 30, 2018. Please refer to the “General & Administrative” slide for additional details on theseexpenses.


Appendix

FFO / AFFO

Note: $ in thousands except for per share amounts.(1)Please refer to the “Glossary” slides for an explanation of FFO and AFFO.

For the Three Months EndedJune 30, 2018

For the Six Months EndedJune 30,2018

Net income allocable to Safety, Income & Growth Inc. common shareholders $1,703 $5,422

Add: Real estate related depreciation and amortization 2,275 4,546FFO allocable to Safety, Income & Growth Inc. common shareholders $3,978 $9,968

FFO allocable to Safety, Income & Growth Inc. common shareholders $3,978 $9,968

Less: Straight-line rental income (3,944) (6,602)Add: Amortization of real estate-related intangibles, net 547 1,017Add: Stock-based compensation 765 765 Add: Non-cash management fee expense 1,273 2,581Add: Non-cash interest expense 363 710Add: Allocable share of non-controlling interests’ depreciation, amortization and straight-line rental income 40 54

AFFO allocable to Safety, Income & Growth Inc. common shareholders $3,022 $8,493

Weighted avg. share count 18,191 18,191FFO per share(1) $0.22 $0.55AFFO per share(1) $0.17 $0.47


Appendix

Balance Sheets

Note: $ in thousands. (1) “Real estate-related intangibles, net” represents real estate-related intangible assets of $198M and $184M as of June 30, 2018 and March 31, 2018, respectively, less real estate-related intangible liabilities of $58M as of June 30, 2018 and March 31, 2018, respectively.

As of As ofJune 30, 2018 March 31, 2018

Assets

Real estateReal estate, gross $484,458 $456,476Accumulated depreciation (7,255) (5,754)Real estate, net 477,203 450,722Real estate-related intangibles, net(1) 140,016 125,802Ground lease assets, net 617,219 576,524Cash and cash equivalents 35,805 83,177Other assets 30,025 18,719Total assets $683,049 $678,420

Liabilities and Equity

Liabilities:Debt obligations, net $307,276 $307,178Accounts payable and other liabilities 7,401 7,585Total liabilities $314,677 $314,763

Equity:Common stock $182 $182Additional paid-in capital 369,612 366,227Retained earnings (deficit) (9,328) (8,295)AOCI 6,101 3,770Total shareholders’ equity $366,567 $361,884Non-controlling interests 1,805 1,773Total equity $368,372 $363,657

Total liabilities and equity $683,049 $678,420


Appendix

Asset Summary by Property Type

Note: Refer to the “Glossary” for definitions.†Park Hotels Portfolio Asset which is on a single master lease.(1) A majority of the land underlying this property is owned by a third party and is ground leased to us through 2044 with rents that are subject to changes in the CPI; however, our tenant pays this cost directly to the third party.

PropertyLocation

(MSA) Property TypeLease Expiration /

As ExtendedRent Escalation

Structure

6201 Hollywood (North) Los Angeles, CA Multi-Family 2104 / 2104 % of CPI

6200 Hollywood (South) Los Angeles, CA Multi-Family 2104 / 2104 % of CPI

Onyx on First Washington, D.C. Multi-Family 2117 /2117 Fixed w/ CPI-Based Adjustments

The Buckler Apartments Milwaukee, WI Multi-Family 2112 / 2112 Fixed

Promenade Crossing Orlando, FL Multi-Family 2117 / 2117 Fixed w/ CPI-Based Adjustments

One Ally Center Detroit, MI Office 2114 / 2174 Fixed w/ CPI-Based Adjustments

LifeHope Medical Campus Atlanta, GA Office 2116 / 2176 Fixed

Northside Forsyth Hospital Medical Center Atlanta, GA Office 2115 / 2175 Fixed w/ CPI-Based Adjustments

NASA/JPSS Headquarters Washington, D.C. Office 2075 / 2105 Fixed

Pershing Point Atlanta, GA Office 2117 /2124 Fixed w/ CPI-Based Adjustments

Regency Lakeview Raleigh-Durham, NC Office 2117 /2122 Fixed w/ CPI-Based Adjustments

Glenridge Point Atlanta, GA Office 2117 /2117 Fixed w/ CPI-Based Adjustments

Doubletree Seattle Airport(1)† Seattle, WA Hospitality 2025 /2035 % Rent

Hilton Salt Lake† Salt Lake City, UT Hospitality 2025 / 2035 % Rent

Doubletree Mission Valley† San Diego, CA Hospitality 2025 / 2035 % Rent

Doubletree Durango† Durango, CO Hospitality 2025 /2035 % Rent

Doubletree Sonoma† San Francisco, CA Hospitality 2025 / 2035 % Rent

Dallas Market Center: Sheraton Suites Dallas, TX Hospitality 2114 / 2114 Fixed

Dallas Market Center: Marriott Courtyard Dallas, TX Hospitality 2026 / 2066 % Rent

Lock Up Self Storage Facility Minneapolis, MN Industrial 2037 / 2037 Fixed

Miami Airport 1 (3500 N.W. 24th Street) Miami, FL Industrial 2117 / 2117 Fixed w/ CPI-Based Adjustments

Miami Airport 2 (3630 N.W. 25th Street) Miami, FL Industrial 2117 / 2117 Fixed w/ CPI-Based Adjustments

Weighted Avg. 59 / 74 yrs


Appendix

Cost Basis Reconciliation

Note: $ in thousands.

As ofJune 30, 2018

Real estate, net $ 477,203 Add: Accumulated depreciation 7,255

Real estate, gross $ 484,458 Add: In-place lease intangibles, net 38,512 Add: Above market intangibles, net 158,406 Add: Lease inducement intangibles, net 747 Add: Leasing commissions, net 221 Less: Below market intangibles, net (57,649)Add: Accumulated amortization 5,891

Cost Basis $ 630,586


Appendix

EPS, FFO, & AFFO Reconciliation

Note: $ in thousands except for per share amounts. (1) Please refer to the “Glossary” slides for an explanation of FFO and AFFO.

Trailing Twelve Months Ended June 30, 2018

Net income allocable to Safety, Income & Growth Inc. common shareholders $3,360Add: Real estate related depreciation and amortization 9,078

FFO allocable to Safety, Income & Growth Inc. common shareholders $12,438

FFO allocable to Safety, Income & Growth Inc. common shareholders $12,438Less: Straight-line rental income (9,655)Add: Amortization of real estate-related intangibles, net 1,847Add: Stock-based compensation 765 Add: Non-cash management fee expense 5,034Add: Non-cash interest expense 1,174Add: Allocable share of non-controlling interests’ depreciation, amortizationand straight-line rental income 55

AFFO allocable to Safety, Income & Growth Inc. common shareholders $11,658

Weighted avg. share count 18,190Earnings per share $0.18FFO per share(1) $0.68AFFO per share(1) $0.64


Appendix

Glossary

Ground Lease Basis Ground Lease Basis is the historical purchase price paid by SAFE to acquire or originate a ground lease.

Combined Property Value (CPV)

The current combined value of the land, buildings and improvements relating to a commercial property, as if there was no ground lease on the land at the property. CPV is based on independent appraisals by CBRE. The Company will use management estimates for recently acquired and originated ground leases for which appraisals from CBRE are not yet available.

Basis as % of CPV Calculated as our Ground Lease Basis divided by CPV. We believe the metric is an indicative measure of the safety of our position in a real estate property’s capital structure and represents our last-dollar economic exposure to the underlying property values.

Value Bank Calculated as the difference between CPV and Ground Lease Basis. We believe Value Bank represents additional potential value to SAFE stockholders through the reversion rights embedded in standard ground leases.

Ground Rent Coverage The ratio of Underlying Property NOI or Estimate Underlying Property NOI to the annualized base rental payment due to us. We believe the metric is indicative of our seniority in a property’s cash flow waterfall. Underlying Property NOI is based on information reported to us by our tenants without any independent investigation or verification by us.

Funds from Operations (FFO)FFO is calculated in accordance with the National Association of Real Estate Investment Trusts (NAREIT) which defines FFO as net income (determined in accordance with GAAP), excluding gains or losses from sales of depreciable operating property, plus real estate-related depreciation and amortization.

Adjusted Funds from Operations (AFFO)Calculated by adding (or subtracting) to FFO the following items: straight-line rental income, the amortization of real estate-related intangibles, stock-based compensation, acquisition costs, non-cash management fees, and expense reimbursements, the amortization of deferred financing costs and other expenses related to debt obligations.

Disclaimer: Set forth in the Glossary are the current definitions of certain items that we use in this presentation. This Glossary is intended to facilitate a reader’s understanding of this presentation. There can be no assurance that we will not modify these terms in future presentations as we deem necessary or appropriate.


Appendix

Glossary – (cont’d)

Underlying Property NOI

With respect to a property, the net operating income of the commercial real estate being operated at the property without giving effect to any rent paid or payable under our ground lease. Net operating income is calculated as property-level revenues less property-level operating expenses as reported to us by the tenant, or as otherwise publicly available. We rely on net operating income as reported to us by our tenants without any independent investigation by us, or as otherwise publicly available. Note that figures denoted by Underlying Property NOI include One Ally using the source: Prospectus, dated December 14, 2017, of the Wells Fargo Commercial Mortgage Trust 2017-C42.

Leverage The ratio of book debt to book equity.

Estimated Underlying Property NOI

Management utilizes (i) estimated underlying property net operating income (NOI) in situations where actual underlying property NOI is unavailable and (ii) projected stabilized property NOI when a project is under development. These figures are based on leasing activity at the property and may include other available market information, such as comparable properties or third party valuations.

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